Admission for Events – The Future?

Moving hand in hand with our r2 live track article below, I spoke recently with some racing insiders about the Adrenaline Fest. The Racing Festival was held this past August at Hiawatha Horse Park in Sarnia, Ontario. The small harness track usually gets a very small handle and in fact, does not even simulcast, but the fest did attract a crowd with other non-racing events – bartending competitions, battle of the bands, rib fest and so on – as well as three days of harness racing. The inaugural event could be deemed successful.

At slots tracks like Hiawatha, admission is free, but for the fest admission was charged. They got about 12,000 paying folks to come out for the three day event.  The demographics were good and they were who racing does want to attract. It was almost a 180 degree shift, with  people under 40 represented as much as over 40.

Demo's for Adrenaline

Attracting a new market, of course did not up the bet – newbies play a couple bucks to show here and there – but the customer experience was satisfying for many of them and they said they would come back. In addition,  as an added kicker for satisfaction, track regulars were pulled aside and let in free, for a bit of goodwill.

Maybe you are now saying “Great, they spent a pile of money and got a few more people out, and those people did not add to handle. What’s the point? Why would a track spend all that money to get such little bang for the buck?” I would answer, that is my point exactly, and why I think that charging admission for special events at tracks is the wave of the future.

First off, racetracks are unlike many other businesses. If you build a motorbike, the suppliers of the product get paid for their product and you build and sell and market the bike and reap the rewards from that. If you have a football team, the suppliers (ie the players) get paid to play. They don’t get 50% of the gate, or what have you. In racing, tracks make 50% of the wagering revenue and the suppliers of the product (me as an owner, or you as a groom or trainer) get the other 50%. Clearly unless both sides work together very little gets done. What happens if little Sarnia got a $10,000 bump in handle for the event. Horsemen get about $1000 of it, and the track gets $1000. Whup-tee-do.  Why would a track invest big money in something for half the revenue back, and why would me as a horse owner do the same? Since we rarely work together in racing, well, very little gets done. A pox on our house.

So, if a slots track does not care what the bet is, how do they increase revenue? By getting cash from the gate. And to attract people to the track we have to do more than put a few brown horses and some colorful jockeys on display. We need to add value to make the high admission price worthwhile.

Long ago in economics class we studied the case of a grocery store manager who was getting sick and tired of seeing his carts not brought back. So he added the lock, where the patron would put a penny into the slot, and got it back when they brought it back. Immediately all the carts we brought back to the front of the store. When people pay for something and perceive it has value, they change their behavior. Churchill Downs charged a big admission to their night racing, and changed people’s behavior.  Regular Churchill fans  went nuts and were annoyed at the charge, but they could be worked around. The general public  perceived value and showed up; they paid, they ate, they drank and they stayed the whole night to watch racing. By all accounts CDI did well, and racing did well. It was a success.

Because on track fans, there for the entertainment and amenities, are very different from the core horseplayer, there was little cannibalization. This was a market expansion, not eating our young.

I think we will see more and more of this, as it makes economic sense; in fact, for attracting new fans it might in fact be the only thing that makes sense. Andy Beyer once said that racing is one of the only businesses in history who thinks that the laws of economics do not apply to them.  There is no doubt that we have to fix the morass of simulcast contracts and high takeout which have killed us as a gambling game. But until we do, going after new markets with racing putting cash into a new improved track experience (and charging for it to make it a worthwhile cash stream), might not be a bad thing at all for the game to embrace.